Perfect World (002624) 2018 Annual Report and 2019 First Quarterly Report Review: Performance Meets Expectations Focus on New Product Launches to Increase Performance

Perfect World (002624) 2018 Annual Report and 2019 First Quarterly Report Review: Performance Meets Expectations Focus on New Product Launches to Increase Performance

The results of the 2018 annual report and the first quarter report of 2019 are in line with the previous indicators. The company’s new product “Perfect World Mobile Games” has excellent online performance. It is expected that a number of well-known IP mobile games will be launched in the second half of the year.

Therefore, we raise the company’s EPS forecast for 2019-20 to 1.

63/1.

85 yuan (previous forecast was 1.

54/1.

68 yuan) and predicts an EPS of 2 in 2021.

05 yuan, maintain “Buy” rating.

The company’s 2018 full year and 2019 Q1 results are in line with expectations, and mobile game business growth improves gross profit margin.

① In 2018, the company realized revenue of 80.

34 trillion, +1 a year.

31%; Attributable net profit 17.

0.6 billion every year 13.

38%. The suspension of the main mainframe version with a slower growth rate in 2018 caused the new products not to go online. ② The first quarter of 2019 reported revenue of 20.

42 trillion, ten years +13.

26%; net profit attributable to mother 4.

860,000 yuan, +34 for ten years.

95%, mainly due to the revenue from the first quarter of the TV drama business confirmed project revenue; ③ In Q1 2019, the company’s gross profit margin reached 68.

11%, ten years +6.

79pcts, +20.

66pcts, mainly driven by the company’s new product “Perfect World Mobile Games”.

Gaming business: The main products are stable in flow, and a number of new IP popular games are expected to drive continued high growth.

The company’s main game products have a stable production flow, of which “Xianxian Mobile Games” is stable on the iOS top 40 list; classic end games “Xianxian” and “Perfect World International 武汉夜生活网 Edition” continue to contribute stable revenue; 2018 launched terminal games and console dual platform gamesSubnautica is widely welcomed by players.

The company ‘s newly launched and researching mobile game products all have big IP blessings. The new “Perfect World” mobile game that is newly launched in March is currently stable in the top three of the iOS bestseller list. It is expected that the release of “Grand Condor 2” and “New God” will be launched in the future.”Magic Continent”, “Four Seasons Songs in Cloud Dreams”, “Dream Collection Cygnus”, “New Swordsman”, “My Origins” and several other big IP games are expected to ensure the company’s continued high growth.

The company’s terminal games and console game companies are also actively developing; meanwhile, the company is also actively expanding its business in the field of e-sports.

Film and television business: The project reserves are abundant, and the performance is expected to remain stable.

Since 2018, the company has launched a number of high-quality film and television dramas. The company produced “Flame Like a Song”, “Return”, “Sweet Honey and Ember Frost”, “Motherhood”, “Summer Legend”, “YouthFighting “,” while we are young “and other fine TV series, to ensure the company’s film and television business growth.

The works of the company, such as “The New Youth of Glorious Trends”, “Peerless Double Pride”, “Brave Heart 2” and “July and Anson”, are expected to be launched and contribute to the performance in 2019.

At the same time, the company fits the theme of the 70th anniversary of the founding of the People’s Republic of China and will launch a number of theme films.

It is expected that the company’s film and television drama business will generally remain stable in 2019.

Risk factors: game supervision continues to tighten; new category R & D fails; film and television drama business goes online less than expected.

Investment suggestion: The company’s old game products have a stable pipeline and a number of well-known IP mobile game products are expected to drive continued high growth.

At the same time, the leading position in the film and television drama business with abundant reserves remained stable.

We raise the company’s EPS forecast for 2019-2020 to 1.

63/1.

85 yuan (previous forecast was 1.

54/1.

68 yuan) and predicts an EPS of 2 in 2021.

05 yuan, maintain “Buy” rating.